Skip to content


S.M. Mohammed Ismail Vs. the Additional Director of Enforcement - Court Judgment

LegalCrystal Citation
SubjectFERA
CourtChennai High Court
Decided On
Case Number C.M.A. No. 549 of 1983
Judge
Reported in1986(7)ECC64
AppellantS.M. Mohammed Ismail
RespondentThe Additional Director of Enforcement
DispositionAppeal dismissed
Excerpt:
.....and seizure--payments on behalf of person resident outside india--receiving payments in foreign exchange on behalf of person resident outside india through persons other than authorised dealer--attempt to receive money in foreign exchange from person other than authorised dealer on behalf of person resident outside india--search of appellant's residential premises--recovery of incriminating documents--statement by appellant that seized documents were letters by his father-in-law from malaysia instructing appellant to receive payments in india and disburse them to specified persons and admitting to receiving payments and making disbursements on behalf of father-in-law--adjudication--levy of penalty--valid--retraction of statement by appellant--could not be accepted--original..........and this is also referred to in the statement made by the appellant on 8th september, 1971. the seized aerograms referred to in the statement of the appellant dated 8th september, 1971 contain instructions regarding the persons to whom the amounts should be paid and those persons have admitted that they had received payments of the amounts shown therein. the seized accounts, admittedly maintained in the hands of the appellant, show that payments forming the subject-matter of the first charge were made by the appellant and that the payments in respect of the second charge have also been shown as received. these are also reflected in the statement of the appellant made on 8th september, 1971. the left hand corner at the bottom of the aerograme dated 23rd august, 1971 has been cut off as.....
Judgment:

Ratnam, J.

1. This is an appeal under Section 54 of the Foreign Exchange Regulation Act (Act 46 of 1973) against the order of the Foreign Exchange Regulation Appellate Board, New Delhi, in Appeal No. 49 of 1979 dated 24thSeptember, 1980. On receipt of information that the;appellant was to receive a sum of Rs. 20,000 from a person resident outside India on his instructions, the office where the appellant was working was searched on 8th September, 1971 but that search proved futile. Thereafter, his residence at Room No. 6, Lala Compound (Upstairs), 206, North Masi Street, Madurai-1, was searched on the same day, which resulted in the seizure of certain incriminating documents. On his examination with reference to the documents so seized, the appellant gave a statement on 8th September, 1971 to the effect that he is an Indian citizen staying at the premises from which the incriminating documents were seized, that he was a native of Velipattinam, Ramanathapuram, that the aerograms seized were written to him by his father-in-law Mohamed Sultan, a resident of Malaysia, instructing him to receive certain payments in India and disburse the same to the persons mentioned by him in that letter, that the letters 'L' and 'T' mentioned in the letters donote rupees and that the amounts to be paid have been indicated against each person in code. The appellant had also stated that during 1971 he received a sum of Rs. 30,000 as per the seized letter dated 13th August, 1971, Rs. 5,000 prior to the receipt of the amount of Rs. 30,000 and another amount of Rs. 40,000 as per the seized letter dated 10th August, 1971 and also admitted having made twelve payments totalling to Rs. 69,900 to different parties under instructions from his father-in-law Mohamed Sultan of Malaysia and added that the coded chit for Rs. 20,000 was cut off from the seized letter dated 23rd August, 1971 and kept separately and when he went to Trichy to receive that amount, owing to some delay he could not do so and therefore, he had to come back without receiving the payment.

2. On the basis of the documents seized as well as the statement given by the appellant, three charges were framed against the appellant as follows:

1. that during August, 1971, the appellant, in contravention of the provisions of Section 5(1)(c) of the Foreign Exchange Regulation Act, 1947, made 12 payments aggregating a sum of Rs. 69,900 by order or on behalf of one Md. Sultan of Malaysia, a person resident outside India;

2. that during August, 1971, the appellant, in contravention of the provisions of Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947, received three payments aggregating a sum of Rs. 75,000 through persons other than authorised dealers in foreign exchange by order or on behalf of Shri Md. Sultan of Malaysia, a person resident outside India; and

3. that during September, 1971, the appellant attempted to receive Rs. 20,000 from a person other than an authorised dealer in foreign exchange, by order or on behalf of Shri Md. Sultan of Malaysia, a person resident outside India and thereby committed contravention of the provisions of Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947 by virtue of the. provisions ofSection 23-B of the said Act of 1947.

Show cause notices were issued to the appellant in respect of the aforesaid contraventions and charges and the appellant denied all the charges. Originally, the charges were enquired into by the Additional Director of Enforcement, Bombay, in the light of the explanation submitted by the appellant. But, however, on appeal, the Foreign Exchange Regulation Appellate Board remanded the matter for readjudication by the Additional Director of Enforcement, Bombay. After remand, the Additional Director of Enforcement, Bombay, after considering the materials placed before him and after taking into account the explanation submitted by the appellant and affording the appellant every reasonable opportunity to put forth his case, by his order dated 30th December, 1978, found that the appellant was guilty of the first and the third charges and further that the appellant was guilty of the second charge to the extent of Rs. 70,000 as against Rs. 75,000 mentioned in the show cause notice. The Additional Director of Enforcement further imposed penalties on the appellant to the tune of Rs. 12,000, Rs. 10,000 and Rs. 2,500 in respect of the first, second and third charges respectively. Aggrieved by this order of the Additional Director of Enforcement, the appellant preferred an appeal to the Foreign Exchange Regulation Appellate Board, New Delhi, in Appeal No. 49 of 1979. On a careful and exhaustive consideration of the materials and the other related aspects, the Foreign Exchange Regulation Appellate Board affirmed the order of the Additional Director of Enforcement, Bombay, and dismissed the appeal. It is the correctness of this order that is challenged in this appeal.

3. The learned Counsel for the appellant first contended that no reliance could be placed upon the statement of the appellant dated 8th September, 1971 as the statement attributed to the appellant on that day was not a voluntary statement and that it was also retracted by the appellant on 26th October, 1971, by a letter addressed by the appellant. There is no dispute that the statement of the appellant was taken on 8th September, 1971. The retraction is stated to have been made as late as 26th October, 1971, more than one and a half month after the recording of the statement. It is also not in dispute that the appellant is an educated person and that he knew the contents of the statement made by him on 8th September, 1971. If really the statement had been secured from the appellant against his wishes or under threat or coercion, it is most unlikely that the appellant would have kept quiet for nearly a month and a half without addressing the concerned authorities bringing to their notice the defects and infirmities in the statement and also retracting it. The inaction on the part of the appellant in having kept quiet between 8th September, 1971 till 25th October, 1971 clearly establishes that the case of the appellant that the statement had been recorded against his wishes and under threat or coercion is a pure after-thought. There are certain inherent features which also establish that the statement given by the appellant was not only voluntary but also a true one. There is no dispute that the appellant is the son-in-law of one Mohamed Sultan of Malaysia. This relationship has also been mentioned in the statement dated 8th September, 1971 given by the appellant. Besides, the aerograms, admittedly seized from the' residence of the appellant about which there is no dispute, are all addressed to the appellant by describing him as 'My dear son-in-law' and this would also establish that the letters have been addressed by the father-in-law of the appellant, Mohamed Sultan, to the appellant and this has also been stated by the appellant. The existence of the relationship of son-in-law and father-in-law between the appellant and Mohamed Sultan of Malaysia was peculiarly within the knowledge of the appellant. The statement of the appellant refers to this relationship. From the aerograms and the manner in which the appellant had been addressed therein, it is manifest that the appellant's father-in-law had addressed letters to the appellant and this is also referred to in the statement made by the appellant on 8th September, 1971. The seized aerograms referred to in the statement of the appellant dated 8th September, 1971 contain instructions regarding the persons to whom the amounts should be paid and those persons have admitted that they had received payments of the amounts shown therein. The seized accounts, admittedly maintained in the hands of the appellant, show that payments forming the subject-matter of the first charge were made by the appellant and that the payments in respect of the second charge have also been shown as received. These are also reflected in the statement of the appellant made on 8th September, 1971. The left hand corner at the bottom of the aerograme dated 23rd August, 1971 has been cut off as stated by the appellant in his statement dated 8th September, 1971, and this tallied with the actual state of affairs. From the foregoing, it is seen that the statement of the appellant dated 8th September, 1971 has been amply corroborated in material particulars and the attempt of the appellant by his letter dated 26th October, 1971 retracting the same was only with a view to nullify the effect of the previous statement dated 8th September, 1971 made by the appellant and the retraction cannot, therefore, be given any weight. We are satisfied on the materials that the statement dated 8th September, 1971 given by the appellant was a voluntary one and a true one as well and the authorities below were right in acting upon the statement so given by the appellant. The first contention of the learned Counsel for the appellant has, therefore, to fail.

4. The learned Counsel for the appellant next contended that the non-production of the panch witnesses who had witnessed the recovery of the aerograms and other papers from the residence of the appellant for examination by the appellant had prejudiced the appellant, as the appellant had been thereby denied an opportunity of establishing that the aerograms and other papers had not been seized from the custody of the appellant. There is no dispute that the appellant was present during the search and had also signed the mahazar for the seizure of the aerograms and other papers. Neither during the search nor at any later point of time before the issue of show cause notices did the appellant raise any objection that the place from which the aerograms and other materials were seized was not his residence. Even in his letter dated 26th October, 1971, while retracting the statement dated 8th September, 1971, the appellant did not whisper that the premises at Madurai from which the aerograms and other papers were seized was not in his occuption or that the documents seized were not his. On the contrary, the appellant has reaffirmed that the premises was under his occupation by referring to it as 'my premises'. Four out of the five aerograms seized show that they had been addressed to the appellant to his office address and one was addressed to a different address. But all the five aerograms were found in the room which was admittedly occupied by the appellant. The fact that the aerograms addressed to the appellant even to his office address were found in the room in his occupation and were seized from that room leaves no doubt that those letters and other papers were seized from the room which was in the occupation of the appellant. The appellant had not placed any materials to show that the room from which these aerograms and other papers were seized was shared by other persons. It was open to the appellant to have examined other persons to establish that the room from which the aerograms and other materials were seized was not under his occupation or that others were there. Viewed in this light, the non-production of the panch witnesses for examination was really not material and could not in any manner be stated to have caused any prejudice whatever to the appellant. The second contention of the learned Counsel for the appellant has also to be rejected.

5. The learned Counsel for the appellant next contended that the non-production of the recipients of the amounts for cross-examination has caused serious prejudice to the appellant and that it cannot, therefore, be said that it has been proved that payments were made by appellant to those named in the aerograms. The copies of statements made by the recipients with reference to the payments made by the appellant have been furnished to the appellant and there is no dispute on this aspect. The authorities below have not relied upon the statements, but have mainly taken into account the contents of the aerograms as well as the accounts maintained in the hand of the appellant. The names of the persons (recipients) appearing in the aerograms also find mention in the account sheet. This is also referred to in the statement of the appellant dated 8th September, 1971. In that statement, the appellant has stated that pursuant to the instructions contained in the aerograms dated 13th August, 1971,. a sum of Rs. 30,000 was received. With reference to similar instructions contained in another aerogram dated 10th August, 1971, the appellant admitted having received a sum of Rs. 40,000. Regarding the amount mentioned in the aerogram dated 23rd August, 1971, the appellant stated that the sum of Rs. 20,000 was not received by him and that the coded sheet for the payment of Rs. 20,000 to be received by him and written at the bottom of the aerogram had been cut off and kept separately which was also seized by Enforcement Directorate. The appellant had also stated that the bottom issuing portion of the aerograms dated 10th August, 1971 and 13th August, 1971 were handed over by him to the concerned persons on receipt of Rs. 40,000 and Rs. 30,000 and that the seized sheet No. 8 contained the notings for the payment of Rs. 25,000 made by the appellant to one Subramanian Chettiar, while similar sheets Nos. 2 to 6 mentioned the names and addresses of persons to whom payments had already been made and yet to be made as per the instructions in the aerograms received from Malaysia. It is the statement of the appellant as well as the entries in the sheets which contain the accounts that had been principally relied upon by the authorities below in finding out whether the appellant was guilty of the charges in that regard. It is thus seen that the authorities have not proceeded to rely solely upon the statements of the recipients to make out a case against the appellant with reference to the charges framed against him, but have taken into account his own statement dated 8th September, 1971, the aerograms seized as well as the accounts maintained in the hand of the appellant himself to conclude that in accordance with the instructions contained in the aerograms, the appellant had received payments and had also made payments. The non-production of the recipients for the purpose of their cross-examination by the appellant cannot, therefore, be taken advantage of by the appellant to contend that serious prejudice has been caused to him.

6. A faint attempt was next made by the learned Counsel for the appellant to contend that there is no proof that the aerograms were written by the father-in-law of the appellant containing instructions regarding receipts and disbursements. Earlier, it has been noticed that these aerograms have been addressed to the appellant and he has been described as 'My dear son-in-law'. The authorities below have also found on a comparison of the writing found in all those aerograms that they are in the same hand. In his statement dated 8th September, 1971, the appellant had admitted that the aerograms had been addressed only by bis father-in-law to him. No doubt, it is seen that these aerograms purport to have been sent by different persons. But the manner in which the appellant had been addressed clearly establishes that the father-in-law of the appellant had addressed those letters to the appellant under different names, but containing instructions regarding receipts and disbursements. There is, therefore, no substance in this contention.

7. Lastly, the learned Counsel for the appellant contended with reference to the third charge referred to earlier that the appellant had not received any money at all from a person other than an authorised dealer in Foreign Exchange, and therefore, the appellant cannot be held to have contravened Section 5(1)(aa) of the Foreign Exchange Regulation Act. 1947. The learned Counsel for the respondent submitted that even though the appellant might not have succeeded in receiving the payment of Rs. 20,000. yet, under Section 23-B of the Foreign Exchange Regulation Act, 1947, even an attempt to contravene any of the provisions of the Act shall be deemed to be a contravention of that provision, and therefore, the conclusion of the authorities below in that regard could not be taken exception to. In his statement dated 8th September, 1971, the appellant had stated that in the aerogram dated 23rd August, 1971, a code message was written with reference to a sum of Rs. 20,000 to be received by the appellant and that was cut off and kept separately. It is not in dispute that that was also one of the seizures under the mahazar at the time when the premises in the occupation of the appellant was inspected on 8th September, 1971. In that statement given by the appellant on 8th September, 1971, he has clearly stated that he went to Trichy on 7th September, 1971 to receive this amount, but as there was some delay, he had to return to Madurai without receiving the amount. There is no controversy that the aerogram dated 23rd August, 1971 contains instructions asking the appellant to proceed to Trichy to receive Rs. 20,000 on producing the chit written in code at the bottom of that aerogram and that had been cut as noticed earlier. That corroborates the statement of the appellant that he visited Trichy 7th September, 1971, with a view to receive the payment of Rs. 20,000, but that he had to come back empty-handed owing to some delay. From this statement, it is clear that the appellant, on his part, had done all that was required of him to receive the payment of Rs. 20,000, but that only on account of some delay he could not get the amount. In other words, an attempt was made to receive the payment of Rs. 20,000, though it was not successful. Under those circumstances, under Section 23-B of the Foreign Exchange Regulation Act, 1947, the appellant should be deemed to have contravened Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947. Therefore, the last contention of the learned Counsel for the appellant has also to be rejected. No other point was urged. No argument was also addressed regarding the quantum of penalty imposed with reference to the three charges levelled against the appellant. No ground is, therefore, made out to interfere with the order of the Foreign Exchange Regulation Appellate Board. Consequently, the Civil Miscellaneous Appeal fails and is dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //